Why do we keep saying the market determines the cost of a player contract

[InTheZone]

Because this is how supply and demand markets work. There are more teams that need help at most positions than there are quality players available. Thus, teams compete for the player's services up to the point that the price outweighs the player.

Sure, an agent probably pulls a fast one here and there, but generally, players are paid exactly what they're worth to the buyers at that point in time. They aren't "overpaying" because paying less wouldn't get them the player.

Now

I don't think that's the case. I believe there's always overpaying and while need may be a reason for doing so they must also outbid other teams and I think some teams get too desperate

 

[MaaS]

I don't think that's the case. I believe there's always overpaying and while need may be a reason for doing so they must also outbid other teams and I think some teams get too desperate

Bolded part of that for emphasis.

So, you agree that they must outbid other interested teams. Yet, you're still saying the teams are paying more than they have to?

If someone offers $300k for a house, and you offer $301k, did you overpay? No, you paid the amount it took to get the house.

Whether buying the house is a good decision is a completely different question.

 

[InTheZone]

Bolded part of that for emphasis.

So, you agree that they must outbid other interested teams. Yet, you're still saying the teams are paying more than they have to?

If someone offers $300k for a house, and you offer $301k, did you overpay? No, you paid the amount it took to get the house.

Whether buying the house is a good decision is a completely different question.

I think you're misunderstanding entirely. But comparing paying .04% extra on a house vs let's say 20% is the same thing?

 

[408Cowboy]

In all fairness you can't say someone is overpaid until you see their performance under the contract. If they compare favorably to other players at their position in the same price range then you made the right deal. If they don't then you overpaid if they outperform you got a bargain.

 

[InTheZone]

In all fairness you can't say someone is overpaid until you see their performance under the contract. If they compare favorably to other players at their position in the same price range then you made the right deal. If they don't then you overpaid if they outperform you got a bargain.

Usually my basis is the production they've shown so far along with position, age, and injury history, not so much what they might do after the contract. We keep saying to compare to other players, but that's the thing, it just increases from that point and it never compares.

 

[408Cowboy]

Yeah there's definitely a multitude of ways you can choose to view this. That's probably why some GM's have more success than others.

 

[MaaS]

I think you're misunderstanding entirely. But comparing paying .04% extra on a house vs let's say 20% is the same thing?

I certainly may be misunderstanding your intent, but I'm not misunderstanding what you wrote.

You're saying that the market is being set by teams that paid more than they had to for average players. Then, subsequent contracts are being based on that number.

GMs aren't going to up their offers by 20% to be generous. They're doing it because they needed a player and competing offers necessitated the price they paid. If they'd have offered 20% less, they wouldn't have gotten the player. For this not to be true, you'd have to believe one of two things:

1) GMs are incredibly generous.
2) Agents have successfully swindled and lied about competing offers by 20% on a league-wide scale.

Additionally, what is this 20% based on? Is there a source that accurately reports each competing offer a player had on the table?

 

[droopdog7]

Players are worth what someone is willing to pay them. Simple as that.

 

[InTheZone]

I certainly may be misunderstanding your intent, but I'm not misunderstanding what you wrote.

You're saying that the market is being set by teams that paid more than they had to for average players. Then, subsequent contracts are being based on that number.

GMs aren't going to up their offers by 20% to be generous. They're doing it because they needed a player and competing offers necessitated the price they paid. If they'd have offered 20% less, they wouldn't have gotten the player. For this not to be true, you'd have to believe one of two things:

1) GMs are incredibly generous.
2) Agents have successfully swindled and lied about competing offers by 20% on a league-wide scale.

Additionally, what is this 20% based on? Is there a source that accurately reports each competing offer a player had on the table?

I just threw a number out because it seems that's the ridiculous hike we see on higher end deals every time we see one. The actual top QBs in the league make $21-$25 mil. The ones in a tier or two below those top QBs make $22-$30 mil. So you're right that the 20% was incorrectly used, for the QB position I should've said anywhere between 5% and 42%, with most of those average/above average qbs being paid closer to 42% more than the top QBs and the trend will keep going up regardless of the actual product.

And you don't think that paying that much more for an average or above average player is overpaying? It doesn't matter the needs and competing offers. We have a history of contracts to go by and see how badly or good said players did, I think what happens is many overrate the player so they end up overpaying, even if they don't think they did. At what point is it simply better to just draft a guy and hope for similar numbers at a much lower rate considering they aren't getting the best product on the field regardless?

 

[cern]

perception and need determine the price more than any other factors. last year the vikes perceived kirk cousins to be the second coming and they had a need for a franchise qb. they also got fleeced.

 

[MaaS]

I just threw a number out because it seems that's the ridiculous hike we see on higher end deals every time we see one. The actual top QBs in the league make $21-$25 mil. The ones in a tier or two below those top QBs make $22-$30 mil. So you're right that the 20% was incorrectly used, for the QB position I should've said anywhere between 5% and 42%, with most of those average/above average qbs being paid closer to 42% more than the top QBs and the trend will keep going up regardless of the actual product.

And you don't think that paying that much more for an average or above average player is overpaying? It doesn't matter the needs and competing offers. We have a history of contracts to go by and see how badly or good said players did, I think what happens is many overrate the player so they end up overpaying, even if they don't think they did. At what point is it simply better to just draft a guy and hope for similar numbers at a much lower rate considering they aren't getting the best product on the field regardless?

I see where we're going off the rails.

You're saying teams are overvaluing players. I agree many of these players aren't worth money they're getting. But, they aren't being overpaid, which is strictly whether one paid more than was due.

 

[408Cowboy]

perception and need determine the price more than any other factors. last year the vikes perceived kirk cousins to be the second coming and they had a need for a franchise qb. they also got fleeced.

All you need to do is look at the difference one year has made in the safety market.

 

[CF74]

Just wondering if there is a stat that shows teams “Over paying” typically always suck or not?

Offseason blues...

 

[kskboys]

The market does determine. If a team over pays someone no matter how good or bad they are; the market changes at that position or Role. For example Sam Bradford signed a contract that was worth 20 mil with incentives. Of course Foles is going to get more than that.

Have to disagree. It's not the market, it's teams w/ extreme needs and tons of salary cap room who are overpaying. That's not market value.

If you have a truck that is worth 30 grand, but someone sells an identical truck for 53 grand, that does not mean your truck is suddenly worth 53 grand.

 

[kskboys]

Yikes, what kind of economics class did OP class go to? Of course the market is set by buyers, it’s called supply and demand.

Of course there is also the fact that there are 31 other GM’s out there that aren’t billionaires that refuse to fire themselves and have a need and desire to win playoff games. I can understand why OP doesn’t understand this being a cowboys fan

Of course. However, someone paying way above perceived market value does not necessarily reset the market.

 

[Roadtrip635]

You can try to trade before they become FA, but you have to find a trade partner to take on the current contract and risks of resigning that player or just lose the picks for a one year rental. You can accumulate picks, but it takes time for most players to develop if they develop at all and if you keep trading away players or losing them, you're just in a continual rebuild mode. At some point, to remain competitive or become a contender you are going to have to pay players, whether it's your own, FAs or both.

Having all that cap space or draft picks don't mean squat once the season starts and you try to win games. The market is whatever others are willing to pay and not just one persons perceived worth. A bottle of water may cost a buck at the local Stop-N-Shop, but in the middle of the desert a rusty tin cup of muddy water will cost you considerably more. You could always refuse and hope to find an oasis over that next sand dune.

 

[kskboys]

Teams don't need to overpay. Nobody's forcing them. They're paying what they think the player is worth to them. That's exactly what "the market determining the cost" means.

Note that we would expect players to be overpaid in such a market, thanks to the Winner's Curse effect. The player goes to the team that bids highest; that team is by definition an outlier in how they value the player. That makes it much more likely that they'll be overpaying than underpaying for his services.

Some people overpaying doesn't necessarily determine the market.

 

[cern]

the Denver broncos have spent millions on semian, brockweiler, lynch, keenum and now flacco. they did so based on their perception of the respective skills of the aforementioned and a desperate need to fill the vacuum left by the departure of manning. P+N=MV

 

[CPanther95]

They are only getting above market value contracts up to the point that they sign the contract. Then that becomes the market value.

 

[Roadtrip635]

Have to disagree. It's not the market, it's teams w/ extreme needs and tons of salary cap room who are overpaying. That's not market value.

If you have a truck that is worth 30 grand, but someone sells an identical truck for 53 grand, that does not mean your truck is suddenly worth 53 grand.

It depends, the market is still what someone is willing to pay. In Texas that truck may be worth $30K, lots of trucks around, but for someone living in Japan it may be worth $53K simply because of the scarcity.

The problem is in trying to determine beforehand if the production will be worth the price in comparison to other players. In many cases it won't be, sometimes the player fails to live up to the expectations, sometimes it may be circumstances beyond their control.